When the long-awaited spectrum auction ended on the second day on March 2, India’s telecom sector painted a completely different picture: increased emphasis on 5G roll-out and muted competition in the country. The days of bitter rivalry when telecom companies fiercely fought to consolidate their holding of the scarce resource that are used to carry mobile calls and data signals are long over.

There were no bidders for some of the bands that were put on auction. The final spectrum price was equal to the reserve prices across bands, which, analysts said in unison, were “on expected lines”.

Discounting the fact that the auction amounted to a meagre 19% of the value of total spectrum on offer, the rating agency Icra said the results have in fact “exceeded” its initial estimates. The auction has made the exchequer richer by around ₹77,815 crore, including an upfront payment of ₹28,000 crore. According to earlier estimates, the government had put on the block airwaves worth ₹3.92 lakh crore.

The first auction in five years that took place amid concerns over the struggling financial health of the industry saw three players take part in it—Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea (VIL). They have collectively bought 855.6 megahertz (MHz) of spectrum, with Jio cornering more than half of the spectrum that was finally auctioned by the government, offering ₹57,123 crore. Jio acquired 488.35 MHz spectrum in bands such as 800 MHz, 1,800 MHz and 2,300 MHz. Bharti Airtel bid for 355.45 MHz out of the total 855.60 MHz of radio frequency acquired by all telecom companies, for an investment of ₹18,699 crore. VIL, which is facing a mammoth liability of unpaid statutory dues to the government, bought 11.80 MHz of spectrum for ₹1,993.40 crore.

Telecom secretary Anshu Prakash said of the total money raised in the auctions, nearly 50% came from the sale of spectrum in the 800 MHz band, followed by 24% from the 1,800 MHz band, 17% from the 2,300 MHz band, and 10% from the 900 MHz band.

Giving operator-wise breakup, Prakash said a total 488.35 MHz spectrum acquired by Reliance Jio in these auctions, included the 800 band (133.75 MHz), the 2,300 band (280 MHz), and the 1,800 band (74.6 MHz). Airtel has acquired spectrum in the 2,300 band (220 MHz), the 1,800 band (71.6 MHz), the 900 band (32.6 MHz), the 800 band (16.25 MHz), and the 2,100 band (15 MHz). VIL bought 5.8 MHz in the 900 band and 6.0 MHz in the 1,800 band.

Since the 700MHz and the 2,500MHz spectrum auction did not see any bid, it is likely that the government will go for a significant cut in reserve prices in the next spectrum auction, said Sanjesh Jain and Sameer Pardikar, analysts with ICICI Securities, in a research note. They said the operators have to make an upfront payment of ₹27,600 crore in the next 10 days and the balance amount in 16 annual instalments with 7.3% interest rate, after two years’ moratorium.

While having bid for renewals of the expiring spectrum, the telecom companies also focussed on consolidating their spectrum holdings in the 800 MHz, 900 MHz and 2,300 MHz bands. Spectrum acquisition for bolstering the data capabilities remained the theme of these auctions, according to Icra.

“While the sub-GHz bands will be crucial for 5G technology deployment going forward as well as improvement of indoor coverage, the appetite for 2,300 MHz band stems from the rising mobile broadband usage and thus the need for improving network capacity,” Icra said.

Post the auctions, the debt levels of the industry will increase further to around ₹5 lakh crore as on March 31, 2022, according to Icra. “Despite the improvement in the operating metrics, the debt protection metrics will continue to remain weak,” it added.

“During the spectrum sale in 2016, where there were seven players, the spectrum sold was 41% by quantity and 12% by value of the total spectrum put to auction. The corresponding figures in the 2021 auction are 37% and 19%, with three participants,” said Prakash. Excluding the spectrum in 700 MHz and 2500 MHz, the spectrum auctioned is about 60% of the spectrum put to auction, he claimed.

Reliance Jio

Mukesh Ambani, chairman, Reliance Industries (RIL), the parent of Jio, said with the increased spectrum footprint, they were ready to further expand the digital footprint in India as well as get themselves ready for the imminent 5G roll-out.

In a statement, the company said it has a well balanced spectrum for LTE services and future upgradation to 5G technology.

Through this acquisition, Jio’s total owned spectrum footprint has increased significantly, by 55%, to 1,717 MHz (uplink+ downlink). Jio said it has the highest amount of sub-GHz spectrum with 2x10 MHz contiguous spectrum in most circles. It also has at least 2x10 MHz in the 1,800 MHz band and 40 MHz in the 2,300 MHz band in each of the 22 circles. With the enhanced spectrum footprint, especially contiguous spectrum, and pan-India infrastructure deployed, Jio said it can service the existing users as well as millions of new subscribers on its network. The acquired spectrum can be utilised for transition to 5G services at the appropriate time, when Jio develops its own 5G stack, said the statement.

RIL said in the statement that it has acquired spectrum in the most cost-efficient manner with an effective cost of ₹60.8 crore per MHz.

Bharti Airtel

I-Sec analysts Sanjesh Jain and Sameer Pardikar said in a research note that Airtel has completed pan-India sub-GHz spectrum holding. “It has also bought 900 MHz spectrum in four circles where spectrum will be up for renewal in 2024. It has significantly added mid-band spectrum in Karnataka and Tamil Nadu, and has bought more 2,300 MHz in circles where prices were reasonable. Though spectrum investment is higher than our estimate for Bharti, the investment has been at most prudent,” said the note.

Airtel said in a statement that it acquired 355.45 MHz spectrum across sub-GHz, mid-band, and 2,300 MHz that will cover 90 million additional customers. “Airtel now has a solid spectrum portfolio that will enable it to continue delivering the best mobile broadband experience in India,” said Gopal Vittal, MD & CEO (India & South Asia), Bharti Airtel, in a statement.

The company stressed that none of the operators participating in the latest auction picked the 700 MHz band due to the absence of an economic case based on the high reserve prices.

“Bharti now has sub-GHz spectrum in all 22 circles, however it does not still have 5MHz spectrum (required for 4G/5G launch) in Gujarat and Kerala. It has bought spectrum in four circles where 900 MHz spectrum will be up for renewal in 2024—UP East, WB, Bihar, and Odisha. This has led to an additional spectrum payout of ₹2,700 crore. It has bought 800 MHz spectrum in Maharashtra, Haryana, UP west, and MP. This has helped Bharti fill the sub-GHz gap at a reasonable investment,” according to I-Sec.

“In 1,800MHz, Bharti has significantly scaled up spectrum holding in Karnataka and Tamil Nadu. It now has four carriers each in these two circles in 1,800 MHz band, and one carrier in sub-GHz and two carriers in 2,100 MHz band. These are Bharti’s strong circles. However, it has skipped adding 2,300 MHz in these circles,” said I-Sec analysts.

Its focus has been on filling the gap in sub-GHz, and capacity spectrum. It is required to make an upfront payment of around ₹7,000 crore, and will make a monthly instalment of ₹1,460 crore starting from 2023-24. “Airtel has been prudent in 2,300 MHz spectrum investment. It has skipped expensive circles such as Delhi, Mumbai, Kolkata, AP, Karnataka and TN. It raised the spectrum holding to 40 MHz in 13 circles in the 2,300 MHz band,” said I-Sec.

“With the conclusion of this spectrum auction, its net debt has increased to ₹1,34,000 crore,” said I-Sec.

Vodafone Idea

“We have used this opportunity to optimise spectrum holding post-merger (of Vodafone India and Idea Cellular in August 2018) to create further efficiencies in few circles. The spectrum we have acquired in five circles will help us enhance our 4G coverage and capacity, enabling superior digital experience for our customers,” the company said.

VIL had a total bid for only 11.8 MHz of spectrum with total investment of around ₹1,993 crore. It will need to make an upfront payment of ₹680 crore, and a monthly instalment of ₹160 crore will kick in from 2023-24, according to I-Sec. “VIL’s spectrum requirement is very low while its high leverage is a big barrier for any generous investment. It has a strong spectrum holding in mid-band (1,800/2,100 MHz) and has much lower data throughput.”

VIL has bought 5 MHz spectrum in 900MHz band in Tamil Nadu which was up for renewal and 0.8MHz in West Bengal. It has also made a solid 5 MHz (in multiples of 5 MHz) block of spectrum in the 1,800 MHz band in Karnataka, UP west and UP east, according to the I-Sec research note.

VIL expects that a large quantum of spectrum will be made available for 5G services at fair prices to enable operators to roll out the technology rapidly, it said in a statement.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.